In what seems to be a swift move towards economic self-regulaTanzania Enforces Ban on Foreign-Owned Fintechs in Mobile Money Sector

tion, the Tanzanian government has decided to restrict certain booming sectors to citizens only. A new directive, effective immediately as of Monday, mandates that foreign-owned and operated fintech companies in the mobile money space must exit the market.

On July 28, 2025, the government issued Government Notice №487A, a candid document outlining a ban on non-citizens engaging in 15 specific business activities. Among these is the multi-billion-dollar mobile money transfer sector, placed alongside “salon business” and “small-scale mining.” For the growing number of international startups that viewed Tanzania as a vital hub in the pan-African fintech landscape, the message is unmistakable, if not entirely welcoming.

The directive, released under the Business Licensing Act, is clear in its instructions: licensing authorities will no longer issue or renew licenses for non-citizens wishing to engage in any of the prohibited business activities.

For those already operating with valid licenses, the government offers a brief period of grace: they can continue their activities until their current license expires. However, no renewals will be granted once the license is up. This shift isn’t an abrupt eviction, but rather a firm yet gradual push towards the exit.

The newly protected business sectors are wide-ranging and include:

• Retail and wholesale trade
• Mobile money transfers
• Tour guiding
• Parcel delivery
• Brokerage in business and real estate

Penalties for non-compliance are severe. Offenders may face fines of up to TZS 10 million (approximately USD 3,800), imprisonment, and the revocation of visas and residence permits. The government is also targeting local enablers, warning Tanzanian citizens who assist or facilitate non-citizens in these activities that they too may face substantial fines and potential jail sentences.

The move has thrown a significant wrench into the expansion plans of many cross-border payment companies. Just as fintechs were fine-tuning their pitches about “banking the unbanked” and “unlocking pan-African corridors,” the Tanzanian government seems to have decided that it prefers to take control of unlocking those corridors itself.

The timing is particularly ironic when you consider the success story of Nala, a homegrown yet globally-minded remittance startup. Founded by Tanzanian entrepreneur Benjamin Fernandes, Nala raised a $40 million Series A round last year, led by prominent venture capital firms like Acrew Capital and DST Global Partners. Nala’s model enables users in the EU, UK, and US to send money directly to over 200 banks and 26 mobile money services across Africa, including Tanzania’s M-Pesa. While the company was founded by a Tanzanian, its significant foreign investment and international operational structure place it in a precarious grey area under the new regulations, which focus on the citizenship of the business operator, rather than just the founder.

The Bigger Picture: Protectionism or Empowerment?

From the perspective of the Tanzanian government in Dodoma, this is a straightforward move to empower local citizens. The official reasoning is to ensure that profits generated from local service-based economies stay within the country, while also protecting small Tanzanian entrepreneurs from being outcompeted by foreign-backed, well-funded companies. It’s a classic example of economic nationalism, designed to reserve the country’s economic ground floor for its own citizens.

However, from the vantage point of VCs in places like San Francisco and London, this appears to be classic protectionism that could stifle investment. By forcing foreign operators out, they would argue, the law reduces competition, which could result in higher fees and poorer service for the very Tanzanian consumers the law aims to protect. It also sends a signal of regulatory instability, which could deter potential investors.

The central irony is that a company like Nala, which successfully attracted substantial foreign capital into the African tech ecosystem, now faces being restricted in its home market by a law intended to limit foreign influence.

The immediate future will be shaped by a race to interpret legal frameworks and a wave of strategic restructuring.

• Loopholes and Lawyers: Lawyers in Dar es Salaam are likely to find themselves working overtime. Fintech companies will be examining the phrase “mobile money transfers” closely. Does it include international remittances coming into the country? Will it affect B2B infrastructure providers who offer payment rails but don’t deal directly with consumers?
• A Rush for Local Partners: The most probable scenario for foreign companies wishing to stay in Tanzania is a series of “shotgun weddings.” These businesses will be forced to partner with Tanzanian majority owners, giving up significant control and ownership. As a result, there will be a seller’s market for capable local partners, putting them in a strong position to negotiate.
• The Investor Signal: For the time being, the global investment community is observing closely. While this move may come from a nationalist perspective, it signals a sense of unpredictability. Tanzania could have just made itself a more difficult prospect for the next wave of foreign startup investments looking for stable and open markets.

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